Test Bank for Labour Market Economics 9e Dwayne Benjamin, Morley Gunderson, Thomas Lemieux, Craig Riddell, Tammy Schirle Chapter 2-17 Answers are at the End of Each Chapter Chapter 2 Student name:__________ MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question. 1) Empirical literature on labour supply patterns for married women tends to find all of the following, except: A) Labour market participation rate for married women was highest in the 35-44 age group. B) Women with children have lower rates of labour force participation. C) The higher the education level, the higher the labour force participation rate. D) The strong negative relationship between the husband's income and the labour force participation rate for married women. E) Participation rate for all married women is around 75 percent. 2) Which of the following statements concerning the elasticity of labour supply is true? A) The total wage elasticity of supply tends to be positive and of low magnitude. B) The income elasticity of supply tends to be positive and of low magnitude C) The compensated elasticity of supply is close to zero D) Overall workers tend to be highly responsive to wage changes E) None of these above statements are true 3) Which of the following statements concerning the elasticity of labour supply is false? A) The overall labour supply for both sexes is likely to be backward bending. B) It is generally higher for women than for men. C) The compensated elasticity (reflecting the substitution effect) tends to be higher in
magnitude than the uncompensated, gross elasticity. D) The overall labour supply for both sexes is likely to be upward sloping E) The elasticity of labour supply with respect to income is negative.
4) Which of the following statements is false? A) In periods of high unemployment, discouraged workers tend to withdraw from the
labour force. B) In periods of low unemployment, discouraged workers tend to re-enter the labour force. C) Discouraged workers are part of the hidden unemployment phenomenon D) Discouraged workers are considered to be marginally attached to the labour force E) Discouraged workers behave in a similar fashion as added workers. 5) Suppose a worker is observed to be working but is forced to work fewer hours than she really
wants to work. Which of the following statements is true? A) The indifference curve that she is on is tangent to the budget line. B) She is on an indifference curve which is lower than the one which is tangent to her budget line. C) She is on an indifference curve which is higher than the one which is tangent to her budget line. D) She is on an indifference curve which is lower than the one which passes through the point on the budget line corresponding to zero hours of work. E) She is not on an indifference curve. 6) The slope of the indifference curve at the lower right-hand corner of the income/leisure
diagram, where zero hours of work are supplied to the labour market, is equal to: A) the prevailing market wage. B) the reservation wage. C) the level of non-market income. D) the slope of the budget constraint. E) the difference between the market wage and the reservation wage 7) The reservation wage is defined as: A) the wage of the reservation clerk in the tourism industry. B) the maximum wage that an employer is willing to pay a worker for a given job. C) the minimum wage that an employee is willing to accept for a given job. D) the equilibrium wage. E) the wage rate at which zero hours of labour is supplied by the workers.
8) All of the following patterns of labour market behaviour can be analyzed with the income-
leisure framework, except: A) moonlighting B) overtime work C) labour force participation D) underemployment E) worksharing 9) Consider the situation of a worker who is ‘at the corner equilibrium' i.e., he or she is
supplying zero hours of work and consuming 16 hours of leisure. In context of the incomeleisure framework, which of the following statements is false? A) The indifference curve is steeper than the budget line. B) The marginal rate of substitution between income and leisure is greater than the wage rate in absolute value terms. C) The indifference curve is flatter than the budget line. D) The rate at which the worker is willing to exchange income for leisure is not equal to the market rate for the exchange of income for leisure. E) Marginally, the worker values an hour of leisure more than she values an hour's worth of income. 10) Which one of the following regarding to an individual's budget constraint is correct? A) The slope of the budget constraint is determined by the market wage rate. B) The level of non-labour income determines the intercept of the budget constraint. C) The slope of the budget constraint is determined by the reservation wage rate D) The slope of the budget constraint is equal to the marginal rate of substitution
between income and leisure E) The slope of the budget constraint is higher for a full-time worker than for a part-time worker. 11) In the neo-classical model of labour supply, which of the following is always true? A) If leisure is a normal good, a wage increase causes an increase in hours worked. B) If leisure is a normal good, a wage increase causes a decrease in hours worked. C) The income effect and the substitution effect work in the same direction. D) The substitution effect causes the worker to work more hours if wages increase. E) None of these options
12) Over the backward bending portion of the labour supply curve, A) The substitution effect of a wage change dominates the income effect. B) Leisure becomes an inferior good. C) The wage elasticity of labour demand is inelastic. D) There is no longer a trade-off between income and leisure. E) The wage elasticity of labour supply is negative. 13) For a worker who is deciding how many hours of labour to supply, all of the following are
true except that: A) The marginal rate of substitution between income and leisure is equal to the wage rate. B) The rate at which she is willing to exchange leisure for income equals the rate at which the market allows her to do it. C) The slope of the budget line equals the slope of the indifference curve. D) The income effect of a wage change equals the substitution effect. E) The worker cannot increase total utility by working more or fewer hours. 14) Which of the following statements most closely applies to the labour force participation
decision? A) It consists of the choice to allocate a portion of one's time to labour market activities as opposed to non-market activities. B) It occurs when one accepts an employment position and is working. C) It occurs when one is actively seeking work. D) It includes paid and unpaid work. E) It doesn't include unemployed workers. 15) The portion of the population that is surveyed as potential labour force participants consists
of: A) B) C) D) E)
the civilian non-institutional population. the unemployed plus the employed population. the entire civilian population that is 15 years of age or older. Individuals who do hold jobs the entire population of Canada.
16) Which of the following statements applies to the unemployed population? A) They are either unable to work, or are on strike. B) They are jobless. C) They are jobless but are actively seeking work. D) They are working fewer hours than they would like to. E) They are working but are underpaid.
17) Which of the following groups of workers are considered to be part of the labour force? A) Full-time students B) The hard-core unemployed C) Discouraged workers D) Members of the Canadian military E) Homemakers 18) What is an approximate figure for the labour force participation rate in Canada? A) 40% B) 50% C) 65% D) 80% E) It cannot be determined, as there are no reliable data available. 19) When examining cross-national data on labour force participation rates, which of the
following phenomena are apparent? A) That higher income countries tend to have higher rates than do lower-income countries B) That these rates for women tend to be higher than they are for men C) That higher income countries tend to have lower rates D) That men in higher income countries have much higher rates than men in lowerincome countries E) That women in higher income countries have much higher rates than women in lower-income countries 20) The expression for the unemployment rate (UR) is: A) UR = (employed−unemployed)/unemployed B) C) D) E)
UR = (employed−unemployed)/labour force UR = unemployed/labour force UR = (unemployed/employed) UR = (unemployed/population)
21) Data on the distribution of the usual number of hours worked per week indicates that: A) almost all workers work about 40 hours B) there is greater variation among women than among men C) most part-time workers work about 20 hours D) men are more likely to work part time than women E) None of these above